Current Microeconomics Events in the United States – Term Paper Example

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Whatever growth that happens is offset by the increasing debt, while low interest rates prevent the economy from affecting a recovery in the short run. Low interest does increase borrowings for businesses and individuals but the default rate in the US is very high; almost twenty percent. Consumers are reluctant to buy new homes and prefer to wait and watch as they are not currently prepared to take more loans during times of uncertainty, primarily because assets have the tendency to decline in value in the short term. In servicing its own debt, the US relies heavily upon foreign money by offering its assets such as government bonds to other nations.

However, America’s credibility in this regard is gradually declining in view of its increasing debt. Countries such as China have begun to question the ability of the US to repay its debts. The US appears to be losing its status of a world super power because many countries have started looking elsewhere for investing. The employment situation in the US continues to deteriorate and the numbers of good jobs are consistently decreasing.

The numbers of American citizens living in poverty are also increasing. Over the last few years, millions of job opportunities, thousands of businesses, and billions of dollars of the country’s wealth have been sent to other parts of the world. The country’s current debt is almost 15 times as compared to thirty years ago, while debts held by individual consumers have increased by over 1700 percent during the last forty years. Every year the inflation rate goes up while incomes continue to remain stagnant.

Such patterns have deteriorated the economic status of the middle class. It is thus evident that unless the current pattern is changed, America will not have a bright future. The long term patterns that have been harming the economy need to be reversed (Crandall and Winston, 2009). Inflation has proved to be a silent tax on citizens that has also been stealing the country’s wealth. For instance, the following pattern of increase in gasoline prices is a strong indicator of the extent to which inflation has been eating into the real incomes of people.

Year Price of Gasoline January, 2009 $1.66 January, 2010 $2.68 January, 2011 $3.05 January, 2012 $3.29 It is surprising to note that during 2011, the average American family spent about $4,155 on gasoline alone. The amount paid by American citizens for clearing electricity bills has been rising and this increase is more than the rate of inflation during the last five years.


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